PPL shareholders want climate change report

By Antyony Salamone, The Morning Call
/
Published: May 19, 2017

Share This

PPL Corp. shareholders on Wednesday became what’s believed to be the first group of electric utility investors in the nation to successfully urge management to publish a report explaining how new climate change policies will affect the company’s bottom line.

During the Allentown-based utility’s annual shareholder meeting in Louisville, Kentucky, more than 50 percent of shareholders voted in favor of a nonbinding proposal that asks PPL management to publish “an assessment of impact” that public policy changes and technological advances related to the 2016 Paris Agreement will have on the company’s portfolio.

The investors want to know how PPL is planning for the “risks and opportunities” presented by global efforts to keep global temperatures within acceptable boundaries, according to the shareholder proposal.

The Paris Agreement seeks to limit the Earth’s average temperature to 2 degrees Celsius — equal to nearly 4 degrees Fahrenheit — above preindustrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.

Credit rating agency Moody’s has noted the “risk exposure” of the power sector as it relates to the Paris Agreement, according to the proposal.

“As investors, we are concerned that PPL is not properly accounting for the risk of its current high reliance on carbon-intensive generation,” the proposal reads, noting that PPL is the seventh largest emitter of carbon dioxide in the U.S. and relies on coal, primarily at power plants it operates in Kentucky, for more than 60 percent of its power generation. In 2010, PPL acquired Louisville Gas and Electric Co. and Kentucky Utilities Co.

PPL spokesman Ryan Hill, responding after the shareholder vote, said the company’s board of directors had urged a no vote, arguing PPL is now primarily a distribution utility that generates little electricity itself and engages in a wide variety of energy-efficiency programs. In Kentucky, where PPL continues to generate energy, the company has retired 800 megawatts of coal-fired power, Hill said.

“Given the vote today, the board will carefully consider those results and determine the best path forward,” Hill said.

In Pennsylvania, PPL shed its power-plant generation unit two years ago, leading to formation of Talen Energy Corp. as a stand-alone company. In addition, Hill said, the company is embarking on a solar-power project supported through the U.S. Department of Energy.

Spearheading Wednesday’s shareholder vote was the New York State Common Retirement Fund, the third largest public pension fund in the country and owner of 1.5 million PPL shares valued at nearly $60 million. The Common Retirement Fund, which authored the proposal in December, has been analyzing its portfolio to position it for a “low-carbon future.”

The Common Retirement Fund in January joined the Portfolio Decarbonization Coalition, an 18-member organization that controls more than $3 trillion in assets and has “pledged to gradually decarbonize a total of $600 billion by designing investment portfolios with a smaller climate change impact,” according to a news release.

New York state Comptroller Thomas P. DiNapoli, trustee of the Common Retirement Fund, issued a statement Wednesday calling the proposal vote a “major victory.”

“The fossil fuel industry needs to address the goals of the Paris Agreement and the worldwide commitment to rein in global warming,” DiNapoli said. “The burden is now on PPL Corp. to show that it is responsive to its shareholders’ concerns.”

But Hill said PPL has “significantly less risk” regarding its emissions than several years ago. He said its carbon emissions have been reduced about 50 percent since it spun off its generating business into Talen Energy.

“We’re a much different company,” he said.

Dan Bakal, director of electric power for the nonprofit sustainability group CERES, said Wednesday shareholders at the oil and gas utility Occidental Petroleum Corp. this month became the first investors nationwide to vote for a similar resolution, but that he believes the PPL shareholder proposal is the first one among electric utilities.

Shareholders of other electric utility companies, including Virginia-based Dominion Energy, have fallen just shy of passing a similar resolutions.

“Shareholders are asking for companies to really think carefully and systematically of the implications of that (Paris) agreement and what it would mean for their business,” said Bakal, whose group promotes sustainable business practices. That, he said, will lead utilities such as PPL to set greenhouse-gas-emission reduction goals.

Cleaner, smarter

Also during the PPL shareholder meeting, CEO William Spence reiterated the company remains committed to advancing a “cleaner energy future.” He also said the company is investing $16 billion in improvements through 2021 on a smarter, more secure energy grid.

In addition to the climate change measure, shareholders approved executive pay for 2016 that included a $2.5 million increase in compensation for Spence, a nearly 20 percent boost.

PPL also announced a quarterly dividend on common stock of 39.5 cents per share, payable July 3 to shareholders as of June 9.

PPL stock closed Wednesday at $38.69, up 21 cents in New York Stock Exchange trading.

One of two Lehigh Valley Fortune 500 companies, PPL employs about 13,000 people worldwide. Its PPL Electric Utilities subsidiary serves about 1.4 million customers in 29 Pennsylvania counties, including Luzerne, Carbon and Schuylkill.

Contact the writer: asalamone@mcall.com; 610-820-6694

We welcome user discussion on our site, under the following guidelines:

To comment you must first create a profile and sign-in with a verified DISQUS account or social network ID. Sign up here.

Comments in violation of the rules will be denied, and repeat violators will be banned. Please help police the community by flagging offensive comments for our moderators to review. By posting a comment, you agree to our full terms and conditions. Click here to read terms and conditions.